DEMAND FORECASTING TECHNICAL FACTORS

BY: ABHYUDAY VIJAY MBA (FC), SEM-3

TECHNICAL ANALYSIS
Technical analysis & Engineering is done continually when a project is being examined & formulated. Technical analysis is primarily concerned with: Material Inputs & Utilities Manufacturing Process/Technology Product Mix Plant Capacity Location & Site Structure & Civil Woks Project Charts & Layout Work Schedule

MATERIAL INPUTS
Classification of Material Input
RAW MATERIAL PROCESSED INDUSTRIAL MATERIALS & COMPONENTS AUXILIARY MATERIALS & FACTORY SUPPLIES UTILITIES

RAW MATERIALS
Raw Materials are processed &/or semi processed goods They are further classified into the following: Agricultural Products Mineral Products Livestock & Forest Products Marine Products

PROCESSED INDUSTRIAL MATERIALS & COMPONENTS

These include: Base metals, Semi Processed Materials, Manufactured Parts, Components & Sub Assemblies It represents important inputs for a number of industries There are certain important questions needed to be answered: What are their properties? What is the total requirement of the project? What quantity would be available from domestic sources? What quantity can be procured from foreign sources? How dependable are the supplies? What has been the past trend in prices? What is the likely future behavior of prices?

AUXILIARY MATERIAL & FACTORY SUPPLIES

Chemicals, Additives, Packaging Materials, Paint, Varnishes, Oils, Grease, Cleaning Materials, etc. Its requirement is to be taken into account in Feasibility Study

UTILITIES
A broad assessment of utilities like power, water, steam, fuel, etc may be made. Questions which can be raised are: What quantities are required? What are the sources of supply? What would be the potential availability? What are the likely shortages or bottlenecks? What measure may be taken to augment supplies?

PRODUCT MIX
Choice of Product mix is guided by market requirements. In production of most of the items, variations in size & quality are aimed at satisfying a broad range of customers. These variations can enable a Company to expand its market and enjoy higher profitability. While planning production facilities of the firm, some flexibility with respect to product mix must be sought, so as to enable the firm to alter its product mix in response to changing market conditions and enhance the power of the firm to survive & grow under different situations.

PLANT CAPACITY
Plant capacity refers to the volume or number of units that can be manufactured during a given period. Several factors have a bearing on the capacity decision: Technological Requirements Input Constraints Investment Cost Market Conditions Resources of the firm Governmental Policy

PROJECT CHARTS & LAYOUTS

It define the scope of the project & provide the basis for detailed project engineering & estimation of investment & production costs. General Functional Layouts Material Flow Diagram Production Line Diagrams Transport Layout Utility Consumption Layout Communication Layout Organizational Layouts Plant Layout

IMPORTANT CONSIDERATIONS IN PREPARING PLANT LAYOUTS

Consistency with Production Technology Smooth Flow of Goods from one stage to another Proper Utilization of Space Scope of Expansion Minimization of Production Cost Safety of Personnel

TECHNOLOGY
CHOICE OF TECHNOLOGY
The choice of Technology is influenced by a variety of Considerations: Plant capacity Principal inputs Investment outlay and production cost Use by other units Product mix Latest developments Ease of Absorption

ACQUIRING TECHNOLOGY

Technology Licensing Purchase of Technology Joint Venture Arrangement

APPROPRIATENESS OF TECHNOLOGY
The technology should be evaluated in terms of the following questions: Whether the technology utilizes local raw materials? Whether the technology utilizes local manpower? Whether the goods and services produced cater to the basic needs? Whether the technology protects ecological balance? Whether the technology is harmonious with social and cultural conditions?

LOCATION AND SITE

The choice of location is influenced by a variety of considerations: Proximity to Raw Material and Markets Availability of Infrastructure Government Policies Other Factors: Availability of Labor skilled, semi-skilled and unskilled. The climatic conditions (like temperature, humidity, wind, sunshine, rainfall, snowfall, flooding and earthquake). General living conditions in terms of Cost of living, housing situation, facilities for education, transport and medical care.

SITE SELECTION
Before selection of sites two to three alternative sites must be considered and evaluated with respect to: Cost of Land Cost of Site preparation and development

CIVIL WORKS
Civil Works are divided into three Categories: Site Preparation and Development Buildings and Structures Outdoor Works

SITE PREPERATION & DEVELOPMENT

Grading and leveling of the Site Demolition and removal of existing structure Relocation of existing cables, roads, power Draining and removal of Standing water

BUILDINGS & STRUCTURES

It is divided into: Factory or process building Ancillary buildings required for stores, warehouses, laboratories, maintenance services Administrative building Staff welfare buildings and medical service building Residential buildings

OUTDOOR WORKS
Supply and Distribution of Utilities Handling and treatment of emission, wastages and effluents. Transportation and traffic arrangements Outdoor lighting Landscaping Enclosure and Supervision (fencing, gates, doors, boundary wall)

WORK SCHEDULE
The Purpose of Work Schedule is: To anticipate problems likely to arise during the installation phase and suggest possible means for coping with them. To establish the phasing of Investments taking into account availability of finances. To develop a plan of operations covering the initial periods.